Mixed Post-Election Trends: Builders See Modest Sales Shifts Amid High Rates and Sticky Prices
December 23, 2024
Based on the latest HomeSphere/BTIG State of the Industry survey results, private builders have likely anticipated a post-election boost in demand, but elevated interest rates and persistently high home prices appear to be deterring buyers.
Compared to October, fewer builders reported positive year-over-year sales trends (27% vs. 32% last month), but fewer also reported negative trends (26% vs. 33% last month). The number of builders exceeding sales expectations decreased slightly, with 25% reporting better-than-expected sales (down from 27% in October), while 30% reported worse-than-expected sales (also 27% last month).
Interestingly, despite typical seasonal patterns, the percentage of builders raising base prices for some, most, or all homes increased for the third consecutive month, while those offering increased sales incentives declined to 25% (down from 27% over the previous three months).
Regionally, business conditions in North Carolina showed strong performance, but builders in Minnesota and Virginia were more pessimistic. Among other major home building markets, Florida remained sluggish, while Georgia, South Carolina, and Texas experienced mixed results.
The latest NAHB/Wells Fargo Housing Market Index (released Dec. 18, 2024) remained at 46.
Highlights from the latest State of the Industry Report
Sales & traffic. Overall, more builders reported flattish business trends. 47% noted flat year-over-year trends vs. just 35% last month; 27% of respondents reported year-over-year increases in sales orders, down from 32% sequentially, but 26% saw a year-over-year decrease in orders in November vs. 33% in October. 35% of builders reported an increase in year over year traffic at communities while 28% saw a decline vs. 36% and 32%, respectively, last month.
Sales & traffic relative to expectations. Business compared to expectations worsened in November compared to October. 25% of respondents saw sales as better than expected (27% in October), and 30% saw sales as worse than expected vs. 27% last month resulting in a change in the better-minus-worse spread to -5 from 0. 21% of builders saw traffic as better than expected, and 28% saw traffic as worse than expected (a better-minus-worse spread of -7). This compares to 26% better and 31% worse last month (a spread of -5).
Base pricing & incentives. The level of builders who decreased base prices in November compared to October was stable; builders who increased incentives declined month-over-month. 21% of builders reported raising either "most/all" or "some" base prices, up from 17% last month; 20% reported lowering "most/all" or "some" base prices, stable sequentially. 3% reported decreasing "most/all" or "some" incentives vs. 6% last month.
Regional color / interest-rate drop impact. While the small number of responses per state often makes us reticent to reach conclusions about specific markets, we note that NC builders were almost uniformly positive on their market. MN and VA builders reported weaker conditions.
HomeSphere/BTIG State of the Industry Report
HomeSphere partners with the global investment bank BTIG to create a monthly report to provide our builders and manufacturers with exclusive and timely insights about the market.
To compile the report, we survey HomeSphere’s 2,700+ regional and local home builders about sales, traffic, pricing, labor costs and other key industry metrics.
How to get the monthly report
If you are a builder and would like to participate and receive the monthly report for free, request an invitation below:
